I commend Deputies Michael McGrath and Calleary on tabling this motion proposing the establishment of a State-owned enterprise bank as a permanent solution to the lending gap which exists in Irish banking.  They did this most ably yesterday evening.  The Small Firms Association has called for the creation of a bank for entrepreneurs and its chairman, Mr. A. J. Noonan, spoke of the major concern affecting his members since the departure of Danske Bank and ACC Bank.   Danske Bank has 100,000 personal customers and 10,000 business customers in Ireland.  It was the second bank within a week to announce plans to close, after ACC Bank had made an announcement stating it was handing back its banking licence and closing its remaining branches in Ireland.

I had an approach from a third party in the ACC Bank, an employee representative organisation, suggesting that the Government could in some way benefit from the acquisition of ACC’s banking architecture and employee skill-set.  I put this to the Minister for Finance by way of a parliamentary question to which I received a reply that the officials in the Department of Finance are examining the correspondence and they will respond in due course.  The proposal is that the State would buy back ACC Bank from Rabobank.  Rabobank purchased ACC Bank from the State in 2002.  It has now announced that it will close ACC Bank next year.  ACC Bank has a head office and nine regional offices with a total staff of 470 people.  It has a big volume of property loans which are in difficulty and it seems that Rabobank plans to outsource these loans to a collection agency.  ACC Bank has small business and farmer loans of €310 million covering 2,900 customers and deposits of €110 million covering 5,000 customers.  The property loans are additional.  The programme for Government provides for the setting up of a strategic investment bank with funds coming from the National Pensions Reserve Fund.  The proposal is that ACC Bank has a structure in place that should accommodate the immediate start up and functioning of such an investment bank.

The current state of banking in Ireland cries out for a new initiative, not only to provide finance to small and medium sized business but also to become a competition lever to force the major banks to improve their services.  There is widespread public support for action on this issue.  It would create a culture of “get up and do” rather one of “wait and see”.  A Government initiative to take back ownership of ACC Bank and enter negotiations with Rabobank would be welcomed on all fronts.  This is the proposal that has been put forward by the employees’ representative organisation.

The Small Firms Association has stated that one in four firms is still finding it challenging to access credit.  The association has questioned whether the troika’s departure will lead to an improved situation for entrepreneurs and small business in being able to access finance and credit.  In this regard Deputy Michael McGrath is correct in saying that there should be an examination of the competitiveness of the Irish banking sector.  Its current position is bad news for both business and personal banking customers because fewer banks means higher borrowing rates, increased charges and reduced rates for deposits.  The Small Firms Association questioned the claim that AIB and Bank of Ireland are lending and promoting what they call “huge grant approved rates”.  The association has said that  banks should re-examine their lending policies and ask why so many loans are approved but not drawn down.

Our motion also refers to the regulation of licensed moneylenders to protect consumer interests and measures to tackle illegal moneylenders.  Figures show that 360,000 people have borrowed from licensed moneylenders.  They indicate that the number of people taking out high cost loans with moneylending agencies has gown by 20% since 2007, despite the number of licensed moneylenders having fallen from 47 to 40 in the same period.  I support the proposal that the imposition of a cap on interest rates on loans could resolve some of the issues around these high interest lending rates.  Research has shown that a quarter of people who use moneylenders run into problems paying them back.  Outstanding loans are now worth approximately €200 million.  We have seen a growth in the number of people taking out loans where the interest rate is above 23%.  We should listen to organisations such as St. Vincent de Paul and MABS, who know about the increased number of people who are in difficulty because of moneylending.